The deal includes £12 million to clear the online computer retailer's debt.

John Peace, chief exec of GUS, said the deal meant GUS could offer computers through stores, catalogue or the Internet. GUS owns retail chain Argos as well as a number of catalogue brands.

Steve Bennett, founder and chief exec of Jungle, has signed a four-year contract with the retail giant and will report to Argos boss Terry Duddy.

Jungle had planned to float until dotcom valuations plunged. Bennett had also had offers from Dixons and Kingfisher for his business. More than 95 per cent of Jungle's business is IT equipment but it also sells videos and music.

Jungle had sales of £75 million for the year to 31 July. In February it was valued at £700 million. ®